Dealing with distributors
Almost every internet retailer has to deal with a supplier at some point. In my experience, about 20% of suppliers are really great to work with, 30% aren’t too bad and the other 50% are awful.Just keep in mind as you source products and build relationships with suppliers that at times it takes pretty thick skin. Today, for instance, I was trying to negotiate a drop-ship agreement with a potentially large supplier for us. When I brought up the issue of drop-shipping (as opposed to stocking the products they carried), he told me that by drop-shipping the products we weren’t adding any value and weren’t entitled to any margin.This is clearly a distributor that doesn’t understand the importance of a distribution channel. I am willing to aggressively market his products, endorse them, provide pre-sales tech support and take care of payment processing. In return I want him to ship the physical goods to the customer blindly (so the customer thinks they are coming from me) and I want us to each make a healthy margin on the transaction. He couldn’t see the value in marketing and selling a product so he lost a potentially large customer. He said that since they have been in business longer than us then we weren’t entitled to make any profit off of their products - this wouldn’t be so surprising, but they are not a retailer - they are a distributor!I was discouraged at first, but I realized that this was just part of the business and kept hammering away at suppliers - within an hour I found another supplier in the same market with similar products and margins that were about twice the margins that he was offering if I stocked his products. In addition, the company ships same-day and their brand has a great reputation.Just hang in there with distributors and take rejection with a grain of salt - there are always good guys out there.
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[…] Dealing with distributors can be a pain - but it’s important to find more SKU’s if you’re serious about making it in the internet retail world. […]
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